Young Adults Carry Heavier Debt Burdens

TransUnion data confirms that Generation Z carries a higher debt load than Millennials did at the same age. The figures remain higher even after adjusting for inflation. Ted Rossman of Money Management International cited the data to explain current financial trends among young adults.

The nonprofit credit counseling agency reports a 35% increase in demand from Gen Z clients over the past year. Rossman noted that the average debt loads for these clients are now 12% higher than they were a year ago. The agency sees a direct correlation between rising costs and increased borrowing among early career workers.

Student loans and high rent are primary drivers of this trend. Rossman pointed to buy now, pay later plans as an additional factor. These elements combine to leave many young adults living paycheck to paycheck with minimal savings. He described the situation as showcasing the high cost of household formation years.

"You have student loans, you have high housing costs," Rossman said. "Those household formation years are very expensive, so GenZer’s actually have more debt than Millennials did at the same age, even adjusted for inflation according to TransUnion."

Rossman advised clients to start by understanding their budgets and monitoring spending. He warned that buy now, pay later options are popular among people in their 20s but function as debt. He cautioned that even interest-free periods require payments every two weeks, which can lead to overspending if not managed carefully.

Credit card interest rates often reach the 20% range, adding to the cost of carrying a balance. Rossman said individuals who feel they are in too deep can ask for professional help. The data provides a clear snapshot of the financial pressure facing the current workforce.